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Packaging giant Smurfit keeps prices steady as input costs fall

Packaging giant Smurfit keeps prices steady as input costs fall
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By Reuters
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By Padraic Halpin

DUBLIN -Packaging giant Smurfit Kappa said input cost inflation moderated in the latter part of 2022 and it kept the prices it charges customers steady as it reported a 38% jump in full year core profit to 2.35 billion euros ($2.53 billion)on Wednesday.

Chief Executive Tony Smurfit had flagged in November that he did not expect prices to rise for the remainder of 2022 but also said Smurfit may be able to unwind prices increases of up to 40% it has pushed onto customers over the previous two years.

While some of those price decreases will "inevitably" come in the second half of 2023 due to the contractual terms with some customers, any declines beyond that will depend on a continued fall in key input costs.

"We can't control energy and waste paper. We just have to see where those actually lead us in the six months or so. If they start to reverse then you'll see things reversing for next year, but we have to wait and see," Smurfit told Reuters.

The Irish group said the price of testliner paper, a key input cost that rose by 100 euros per tonne in the first half of 2022, has fallen by 160 euros per tonne since June. Kraftliner prices, up 60 euros per tonne in the first half, have since fallen by 120 euros a tonne.

Europe's largest paper packaging producer said 2022 box volumes were down less than 2% against a strong prior year due to a partial reversal of unsustainably high pandemic period demand levels and the impact of inflation.

While the slowdown was particularly evident in December when customers reduced their stock and took a break from production, Smurfit said he believed the worst of the economic slowdown was over with some positive signs emerging in Italy and the sluggish German and UK markets.

Shares in Smurfit Kappa, up 12% year-to-date before Wednesday's results, were 3.4% lower at 37.8 euros by 0830 GMT.

($1 = 0.9305 euros)

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